HMRC forego small fry to concentrate on bigger fish

As highlighted in our article last week, the tax man is using big data to gather more information about us all, as tax payers. The intention of HMRC's discussion document about fines is another step to that end. However, no one expected the first step, wiping out 890,000 fines of £100, would be so big!

In an unprecedented turn of events, HMRC is to look again at its
fines procedure. Anyone operating in the 2013/14 tax year who filed
a late self-assessment (after January 31st, 2105) may benefit from
the changes.

The first wave of correction is huge. Almost 900,000 individuals
who were late with their tax return are to let off the hook by the
taxman. Providing an individual has a reasonable
excuse*, HMRC has informed staff to wipe the fine off
the records.

What is a reasonable excuse for missing self-assessment
deadlines?

*In an attempt to quicken the appeals process from
an internal perspective, and to work on "higher priority post",
HMRC has added further 'reasonable excuse' to its list of those
accepted without contention.

A move that will please many is that issues with the taxman's
online facility is now listed as a viable reason.

Formal announcement follows leaked February memo

Way back in February, The Telegraph revealed that the plan to
scrap this round of fines was imminent. A leaked internal memo to
the paper confirmed the extent of the problem.

However, it's taken until the 5th June for the tax office to
confirm the details. The main reason for that is because of the
discussion document that was open until May. It's now closed for
discussion, but the 26-page pdf is
still available for download.

The reason for the move, according to said document, is that the
current fine system doesn't meet current objectives.

Yes, the fines are imposed as a deterrent and to highlight how
important filing self-assessments on time is. But the
implementation of those fines also has to be "cost effective,
fair and proportionate".

It's this target that the current structure is missing,
preventing the department from pursuing greater tax avoidance
offenders.